Intrinsic Rewards & Employee Motivation - Coursework Example

Rewards & Employee Motivation Introduction The assertion that, “In today’s workplace, intrinsic rewards are more important than extrinsic rewards for employee motivation,” implies that it is the internal rewards that an employee can only define for himself and are described somewhat nebulously with terms like ‘satisfaction,’ ‘sense of accomplishment,’ or ‘fulfilment’ that are more important than external rewards such as performance-based pay, which can be defined the same way for everyone. Taken at face value, it seems to make sense; an employee will not perform to his full potential if he does not have a good feeling about doing so. Most contemporary literature assumes that this ‘good feeling’ is more substantial if it is the result of some intrinsic rewards, because they reward a person’s higher-order needs such as self-actualisation, self-esteem, or the respect from peers. (Kominis & Emmanuel, 2005, p. 57) Even though it is recognised that each employee requires a unique combination of both intrinsic and extrinsic rewards for proper motivation (Beswick, 2007), the perspective presented to managers in recent commentaries is that the intrinsic rewards should be given far more weight. The idea is that extrinsic rewards, being the same for everyone and differing only in terms of size, can be offered by any employer. In order to get the most from its employees, or even to simply retain its workers, an organisation must offer some other “added value” to the job, and consider rewards from an almost ‘spiritual’ perspective. (SHRM India, 2010; Whittington & Galpin, 2010, pp. 14-16) This obvious question raised by this perspective is whether or not it is actually valid. Do employees in fact respond better to or prefer intrinsic rewards than extrinsic ones? This paper will briefly review some of the studies that have been done that attempt to answer that question, which is perhaps more complicated than it first appears. What Employees Say About Motivation The most obvious way to determine what factors motivate employees to work is to simply ask them. Repeated surveys over a period of about 40 years showed that employee motivations sometimes do change over time. In a survey in 1946, for example, industrial workers rated “appreciation” as the most important of a number of suggested motivating factors and rated “discipline” the least important. By the 1980’s, however, “interesting work” became more important, and by the early 1990’s, “good wages” had become the priority. (Wiley, 1997, p. 267) Good wages are most definitely an example of extrinsic motivation, and appreciation may be if the employee is working with an expectation of receiving acknowledgment in return. Furthermore, in the 1992 survey some other clearly intrinsic motivations ranked rather low in employees’ opinions: the “feeling of being in on things” was ranked 9th out of 10 factors, “personal or company loyalty to employees” was only ranked 6th, and “interesting work” was ranked 5th. To be fair, “appreciation” did rank as the second-most important motivating factor, but since it was separate from “personal or company loyalty to employees” seems to have been considered more as a quid pro quo, extrinsic factor. Other extrinsic motivations such as “job security” and “promotion and growth within the organization” ranked third and fourth, respectively. (Wiley, 1997, p. 268) These results seem to indicate that the ideas encompassed in the Hierarchy of Needs Theory of Maslow and Reinforcement Theory are significantly relevant to employee motivation, and as such, indicate that the balance between intrinsic and extrinsic motivation tips to the extrinsic side. (Wiley, 1997, pp. 277-278) But some scepticism is probably warranted; this particular study did indicate that motivational priorities can change over time, and it is itself nearly 20 years old. What was apparent from the results of a study in 1992 may not be valid today. A more recent study conducted among mid-level managers in 2005 had slightly different results, indicating that intrinsic rewards such as “personal development” and “responsibility” were very important to these workers. They were not, however, considered more important than definite extrinsic motivators such as “cash bonus” and “executive stock options.” (Kominis & Emmanuel, 2005, p. 64) The most significant result of the study was that the survey participants almost universally seemed to value both extrinsic and intrinsic rewards nearly equally, and neither could be clearly said to be more preferred; participants’ opinions of the value of intrinsic rewards were higher than extrinsic ones, but higher motivation and performance were associated with a combination of rewards rather than one or the other. (Kominis & Emmanuel, 2005, pp. 68-69) Finally, an even more recent study sought to measure motivation in terms of employee extra-role behaviour, using workers in non-profit public sector organisations as a test group. (Reychav & Sharkie, 2010) The rationale for this kind of test is that the economic uncertainty of the past couple years has significantly reduced peoples’ perceptions of job security and employers’ loyalty towards workers, and as a consequence, employees are probably less inclined to provide extra-role work – effort that contributes to the organisation that is beyond the terms of the employment contract. (Reychav & Sharkie, 2010, pp. 227-228) The findings of the study determined that employees’ inclinations to make extra-role contributions to their work were determined by the level of ‘trust’ the employees have towards management. Trust can be measured by four factors: the expectation of rewards (an extrinsic factor); an atmosphere that encourages job autonomy (an intrinsic factor); management values, in the context of how clearly they are communicated to the organisation and reflected in the way things are done (an intrinsic factor); and psychological support, or the sense that the management ‘cares’ about the people in the organisation (also an intrinsic factor). When these four factors are high, ‘trust’ in management is high, and the commitment of employees is reflected in higher levels of extra-role activity. By contrast, other intrinsic factors such as “personal satisfaction” were not found to be indicative of the employees’ willingness to “go the extra mile” in their work. (Reychav & Sharkie, 2010, p. 235; 237-238) Another Perspective: There Are No Such Things as Extrinsic or Intrinsic Rewards Part of the puzzle of whether intrinsic or extrinsic rewards are more important to employees’ motivation might be answered by the work of psychologist Steven Reiss (2001, pp. 17-18), who presents the idea that all human behaviour is determined by 16 basic desires: The desire to influence others (Power). The desire for self-reliance (Independence). The desire for knowledge (Curiosity or Learning). The desire for acceptance by others (Inclusion). The desire for uniformity and organisation (Order). The desire to accumulate material things (Saving or Collecting). The desire to be loyal to one’s heritage or forebears (Honour). The desire for fairness and justice (Idealism). The desire for companionship (Sociability). The desire to reproduce (Family). The desire for social standing or peer approval (Status). The desire to “get even or to redress wrongs suffered (Vengeance). The desire for sex and attraction to the opposite gender (Romance). The desire for food (Eating). The desire for exercise and movement (Physical Activity). The desire for emotional calm (Tranquillity). The relative importance of each of these desires differs in every person, and is largely determined by the person’s genetic make-up; experience and environment do have some effect, but not as much as heredity. (Reiss, 2001, p. 83) Each person’s natural inclination is to strive for what Reiss calls value-based happiness, which is when the basic desires are satisfied in their proper relative proportions. This differs from regular feelings of happiness, which are based on the senses. (Reiss, 2001, p. 123) Using examples from above to put the theory in the context of employee motivation, a person who values job autonomy and is motivated by it to perform extra work likely has a high degree of desire for Independence. Likewise, the employee who is strongly motivated by the promise of higher pay has a strong desire for Saving or Collecting. In Reiss’ view, characterising rewards in just two categories – intrinsic and extrinsic – is an over-simplification, and it might be inappropriate to even think of rewards in those terms. (Grabmeier, 2002) People are motivated to satisfy their basic desires, so motivation itself is completely intrinsic; the rewards that encourage people to strive harder to fulfil those desires are entirely extrinsic. According to Reiss, there can be no such thing as undefined ‘satisfaction’ in a job, and the idea that ‘work is its own reward’ is nonsense. Any factor that motivates does so because it gives an expectation of a measurable value that can be obtained from it. Conclusion: Intrinsic Rewards Are Not More Important Than Extrinsic Rewards Since Reiss suggests that ‘intrinsic’ and ‘extrinsic’ are poor descriptors of factors that motivate people to excel in their endeavours, it might be better to think of motivation in terms of the ‘psychological contract’ the ‘deal’ or mutual understanding, either explicit, implicit, or a bit of both, between the employer and employee. The psychological contract has two facets, the transactional, which is the explicit, tangible terms covering the motivating factors usually considered extrinsic – pay and other incentives, terms and conditions of work, and a clear definition between the ‘employee’ and the ‘person’ – and the relational, which encompasses the factors usually considered intrinsic – emotional investment in the job, personal development and growth, and ‘job satisfaction.’ (Flynn, 2011, p. 12) Flynn suggests that as a business matures the relative importance of motivating factors shifts from the transactional to the relational, and that moreover, the resulting make-up of the psychological contract between employer and employee is a consequence of the business maturing, and not a tool that can be used to manage the process. (Flynn, 2011, p. 15) This reflects the results of the earlier surveys that showed motivations changing over time, on a broad scale in the 1992 study (Wiley, 1997), and at an individual level in the 2005 study. (Kominis & Emmanuel, 2005, p. 67) Despite the shifts, the two sides of the psychological contract cannot be entirely separated, and as Kominis and Emmanuel discovered, the most productive and motivated managers were the ones for whom the traditionally intrinsic and extrinsic motivating factors were well-balanced. Nevertheless, the current focus on motivation is almost entirely on the intrinsic side of the equation, usually expressed in terms of ‘employee engagement’: emotional involvement, enthusiasm, optimism, and satisfaction with ones’ work. (Medlin & Green, 2009, p. 944; Whittington & Galpin, 2010, p. 16) Some examples of key principles of employee engagement are challenging and specific performance goals, task variety, job identity, and clear contribution to the organisation, recognition by and communication with company leadership, and fostering trust in the organization. (Whittington & Galpin, 2010, p. 16) The company which does not address these is not providing factors for intrinsic motivation, and does not have engaged employees. That is likely true; but as Reiss explains, people have some degree of desire in other areas besides those that would be satisfied by the above principles – Status, Inclusion, Order, Power, Independence, Learning – and the employer may never know, and for that matter, the employee himself may not consciously know to what relative degree those desires or others are important to him. Focusing solely on those things without at least indirectly addressing other desires, such as providing good compensation so the employee can satisfy his desires for Eating, Collecting, and Romance, for example, might result in the company’s efforts to provide ‘intrinsic rewards’ falling flat, for reasons that are not quite obvious to anyone. Intrinsic rewards are important for employee motivation, but they are not more important than extrinsic rewards. In order to motivate employees to perform at their best and be ‘engaged’ in their work, a proper balance between the two is essential. In order to achieve that balance, communicating with employees and understanding their individual differences is vital. References Beswick, D. (2007). ‘Management implications of the interaction between intrinsic motivation and extrinsic rewards.’ University of Melbourne [Internet], updated 15 February 2007. Available from: http://www.beswick.info/psychres/ management.htm. Flynn, S. (2011). ‘Can you directly motivate employees? Exploding the myth.’ Development and Learning in Organizations, Vol. 25, No. 1 (forthcoming), pp. 11-15. DOI: 10.1108/14777281111096771. Grabmeier, J. (2002) ‘Intrinsic Motivation Doesn’t Exist, Researcher Says.’ Ohio State Research News [Internet], Ohio State University. Available from: http://researchnews.osu.edu/archive/inmotiv.htm. Kominis, G., and Emmanuel, C.R. (2005). ‘Exploring the Reward Preferences of Middle-Level Managers.’ Qualitative Research in Accounting & Management, Vol. 2, No. 1, pp. 54-76. DOI: 10.1108/11766090510635389. Medlin, M., and Green, K.W. (2009) ‘Enhancing performance through goal setting, engagement, and optimism.’ Industrial Management & Data Systems, Vol. 109, No. 7, pp. 943-956. DOI: 10.1108/02635570910982292. Reiss, S. (2001). Who Am I? The 16 Basic Desires That Motivate Our Actions and Define Our Personalities. New York: Tarcher/Putnam. Reychav, I., and Sharkie, R. (2010). ‘Trust: an antecedent to employee extra-role behaviour.’ Journal of Intellectual Capital, Vol. 11, No. 2, pp. 227-247. DOI: 10.1108/14691931011039697. SHRM India. (2010). ‘Motivation in Today’s Workplace: The Link to Performance.’ Society for Human Resource Management India [Internet], 7 January 2010. Available from: http://www.shrmindia.org/motivation-today%E2%80%99s-workplace-link-performance. Whittington, J.L, and Galpin, T.J. (2010). ‘The engagement factor: building a high-commitment organization in a low-commitment world.’ Journal of Business Strategy, Vol. 31, No. 5, pp. 14-24. DOI: 10.1108/02756661011076282. Wiley, C. (1997). ‘What motivates employees according to over 40 years of motivation surveys.’ International Journal of Manpower, Vol. 18, No. 3, pp. 263-280. DOI: 10.1108/01437729710169373. Read More